1. Sandhill Industries Inc. acquired land,
buildings, and equipment from a bankrupt company, Torres Co., for a
lump-sum price of $910,000. At the time of purchase, Torres’s
assets had the following book and appraisal values.
Book Values |
Appraisal Values |
|||||
---|---|---|---|---|---|---|
Land |
$260,000 | $195,000 | ||||
Buildings |
325,000 | 455,000 | ||||
Equipment |
390,000 | 390,000 |
To be conservative, the company decided to take the lower of the
two values for each asset acquired. The following entry was
made.
Land | 195,000 | |||
Buildings | 325,000 | |||
Equipment | 390,000 | |||
Cash | 910,000 |
2. Teal Enterprises purchased store equipment by
making a $2,600 cash down payment and signing a 1-year, $29,900,
10% note payable. The purchase was recorded as follows.
Equipment | 35,490 | |||
Cash | 2,600 | |||
Notes Payable | 29,900 | |||
Interest Payable | 2,990 |
3. Flint Company purchased office equipment for
$19,200, terms 2/10, n/30. Because the company intended to take the
discount, it made no entry until it paid for the acquisition. The
entry was:
Equipment | 19,200 | |||
Cash | 18,816 | |||
Purchase Discounts | 384 |
4. Buffalo Inc. recently received at zero cost
land from the Village of Cardassia as an inducement to locate its
business in the Village. The appraised value of the land is
$35,100. The company made no entry to record the land because it
had no cost basis.
5. Carla Company built a warehouse for $780,000.
It could have purchased the building for $962,000. The controller
made the following entry.
Buildings | 962,000 | |||
Cash | 780,000 | |||
Profit on Construction | 182,000 |
Prepare the entry that should have been made at the date of each
acquisition. (Round intermediate calculations to 5
decimal palces, e.g. 0.56487 and final answers to 0 decimal places,
e.g. 5,275. Credit account titles are automatically indented when
amount is entered. Do not indent manually. If no entry is required,
select "No Entry" for the account titles and enter 0 for the
amounts.)
No. |
Account Titles and Explanation |
Debit |
Credit |
---|---|---|---|
1. |
enter an account title for the first transaction |
enter a debit amount |
enter a credit amount |
enter an account title for the first transaction |
enter a debit amount |
enter a credit amount |
|
enter an account title for the first transaction |
enter a debit amount |
enter a credit amount |
|
enter an account title for the first transaction |
enter a debit amount |
enter a credit amount |
|
2. |
enter an account title for the second transaction |
enter a debit amount |
enter a credit amount |
enter an account title for the second transaction |
enter a debit amount |
enter a credit amount |
|
enter an account title for the second transaction |
enter a debit amount |
enter a credit amount |
|
3. |
enter an account title for the third transaction |
enter a debit amount |
enter a credit amount |
enter an account title for the third transaction |
enter a debit amount |
enter a credit amount |
|
4. |
enter an account title for the fourth transaction |
enter a debit amount |
enter a credit amount |
enter an account title for the fourth transaction |
enter a debit amount |
enter a credit amount |
|
5. |
enter an account title for the fifth transaction |
enter a debit amount |
enter a credit amount |
enter an account title for the fifth transaction |
enter a debit amount |
enter a credit amount |
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